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Ask HN: Why is pay so much higher in the US? (or is it?)

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Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#141

Post by gnicholas »

gigatexal wrote: post #139
gnicholas wrote: post #130

Earlier quoted context omitted.

This sounds too good to be true to me (as a former tax lawyer). If you're being paid 500k in salary I can't think of how you take home this much. Maybe you put a ton into tax-deferred accounts, but that's not the same as netting 80% as take-home. It's kicking the can down the road (to a time when tax rates may be even higher).

Tangent: are you a former tax lawyer turned dev? What’s your story? I am a sucker for folks that have interesting or non-traditional (CS degree -> sw job) journeys into tech.

I did two years of CS undergrad before switching to Econ and Linguistics. Then went straight to law school like a good boy. I worked 7 years in BigLaw and dabbled on the side with a side project. Didn't do the coding myself but knew enough to work closely with the devs doing the work.

One day I posted on HN [1] and it blew up and became the 9th-most popular Show HN. A few weeks later we were in FastCo and dozens of other news outlets, and a couple months after that we won a startup competition at Stanford.

My wife had a baby at that time, so I decided to do the startup full-time to give it a go and also have more time with the baby and supporting my wife's demanding career. The baby is now eight, and it's been awesome to be so involved in her life.

In terms of coding, I'm able to do minor code tweaks here and there, but all the heavy lifting was done by my technical cofounder and a couple excellent contractors. Our main revenue source is actually IP licensing, so having been a lawyer comes in handy!

1: https://news.ycombinator.com/item?id=6335784

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#142

Post by abofh »

gnicholas wrote: post #130
gigatexal wrote: post #109

Earlier quoted context omitted.

I’m an expat here too and I pay a CPA to do my taxes. (1 rental means a biz return and all the deductions… meh) if you can take home 400k from 500k in gross then you’re doing amazingly well.

This sounds too good to be true to me (as a former tax lawyer). If you're being paid 500k in salary I can't think of how you take home this much. Maybe you put a ton into tax-deferred accounts, but that's not the same as netting 80% as take-home. It's kicking the can down the road (to a time when tax rates may be even higher).

The big ones are feie, depreciation on us property, some tax deferred accounts yes. Some of it is indeed kicking the can down the road, but by my estimates I'm near the peak of my earnings power and plan to retire early, so future tax rates for me personally are expected to be on a downslope.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#143

Post by abofh »

gnicholas wrote: post #129
abofh wrote: post #48

Earlier quoted context omitted.

So, I'll be honest, taxes in the EU are (at the basic levels) near what they are in the US - top-line last-dollar percentage wise anyhow. But in the US there's a massive cottage industry in creating and managing deductions. I'm currently abroad, so while I'm subject to US taxes, the FEIE allows the first 112k to be deducted from income tax (not SS, so not everything but the bulk of it), and while I still expect to to…

> If by some weird event I was earning 10x what I earn today, you can rest assured my tax rate in the US wouldn't go up from here, but instead it would be restructured into deferred capital gains (stock options), corporate ownership, investment in tax deferred or tax exempt accounts and so forth What would you do to go from 200k to 2M without increasing your tax rate, if you're being paid in cash salary? Can you cont…

That's the trick - if you're being 200k, your ability to negotiate how you're paid is limited, if you're being paid 2MM, you can almost certainly negotiate the payments to be a more tax favored solution.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#144

Post by wbsss4412 »

SamReidHughes wrote: post #140
wbsss4412 wrote: post #134

Earlier quoted context omitted.

> Yes, but it's most likely a top dermatologist. It is not. It is a dermatologist. > Almost one year is definitely not normal. I would like to believe that too, but I don’t know what to tell you.

This is not the experience of my family members.

Never said it was typical, only that it exists.

When these conversations come up, people always trot out the wait time line, and it’s true, wait times are generally on the lower end for the US compared to other countries. However, they are not zero. Depending on the need, the region, and the time, you have to wait in America, just the same as in other countries.

Useful reference point: https://www.oecd-ilibrary.org/sites/242e3c8c-en/1/3/2/index....

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#145

Post by gnicholas »

abofh wrote: post #142
gnicholas wrote: post #130

Earlier quoted context omitted.

This sounds too good to be true to me (as a former tax lawyer). If you're being paid 500k in salary I can't think of how you take home this much. Maybe you put a ton into tax-deferred accounts, but that's not the same as netting 80% as take-home. It's kicking the can down the road (to a time when tax rates may be even higher).

The big ones are feie, depreciation on us property, some tax deferred accounts yes. Some of it is indeed kicking the can down the road, but by my estimates I'm near the peak of my earnings power and plan to retire early, so future tax rates for me personally are expected to be on a downslope.

What can an individual depreciate that offsets against hundreds of thousands of dollars of wages that are taxed as ordinary income? I get how depreciation helps you if you're renting out apartment buildings, but the tax code revamp of 1986 got rid of the passive investment tricks that allowed doctors/dentists/etc. to offset their ordinary income with depreciation deductions.

Your point about your personal tax rate going down makes sense. Congrats on the impending retirement!

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#146

Post by p1esk »

wbsss4412 wrote: post #134
credit_guy wrote: post #126

Earlier quoted context omitted.

Yes, but it's most likely a top dermatologist. There are lots of dermatologists around. For the first visit, it's normal to have to wait one or two months. Almost one year is definitely not normal.

> Yes, but it's most likely a top dermatologist. It is not. It is a dermatologist. > Almost one year is definitely not normal. I would like to believe that too, but I don’t know what to tell you.

How many dermatologists have you called before giving up and agreeing to wait until May? In my experience it takes 3-5 calls to find someone willing to see me within a few days.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#147

Post by abofh »

gnicholas wrote: post #145
abofh wrote: post #142

Earlier quoted context omitted.

The big ones are feie, depreciation on us property, some tax deferred accounts yes. Some of it is indeed kicking the can down the road, but by my estimates I'm near the peak of my earnings power and plan to retire early, so future tax rates for me personally are expected to be on a downslope.

What can an individual depreciate that offsets against hundreds of thousands of dollars of wages that are taxed as ordinary income? I get how depreciation helps you if you're renting out apartment buildings, but the tax code revamp of 1986 got rid of the passive investment tricks that allowed doctors/dentists/etc. to offset their ordinary income with depreciation deductions. Your point about your personal tax rate go…

I still have an apartment in the US that's gone from being a primary residence to an investment property - so straight line depreciation on the asset offsets the rental income, then the mortgage interest and SALT deductions still exist on the property itself. It doesn't offset hundred/s/ of thousands of earned income on its own, but the left pocket takes the loss, the right pocket takes the gain so to speak. My first (income) taxable dollar to just above 200k when combined with the FEIE and everything else along the way. There will be capital gains to be paid if the housing market ever recovers and I sell without replacing, but in the mean time it keeps the cash in my accounts.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#148

Post by badpun »

gigatexal wrote: post #111
badpun wrote: post #54

Earlier quoted context omitted.

Mediocre skills pay $150k usd in the US now though.

I could never pass the ridiculous white board challenges. Didn’t have any of that drama here. A take home and a relaxed discussion about it after the fact and I got the role.

I live in Europe, but got a couple of remote US jobs over the years. Didn't get a single whiteboarding exercise in them. At most, there were live coding exercises, but one where they were interested in how well I know the language/frameworks, what is my thinking process, how do I structure the code, how do I handle errors and unexpected states etc. - so, in essence, the things relevant to daily coding tasks, not some algorithmic trivia.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#149

Post by altereds »

I see this as a chicken and egg situation. Even within any country if you see the salaries are higher in cities where you also have most job opportunities. This attracts workers who seek more opportunities and higher rewards. Those who are not able to compete or not interested to compete would not migrate to the city. Companies that operate in these places have to offer more to get the best among those available. Companies that need to get the best talent have to be ready to bear these higher costs to operate from these cities.

Reading up on the history of California, I see from a long time back since the times of the gold rush it has been a place which attracted people seeking more opportunities and the best people would stay there when they are rewarded for moving there. There may be multiple such cities and locations in the US , but even within the US salaries would differ in different cities.

I think the best answer may have to come from an economist who would understand these better.

Re: Ask HN: Why is pay so much higher in the US? (or is it?)

#150

Post by gigatexal »

gnicholas wrote: post #141
gigatexal wrote: post #139

Earlier quoted context omitted.

Tangent: are you a former tax lawyer turned dev? What’s your story? I am a sucker for folks that have interesting or non-traditional (CS degree -> sw job) journeys into tech.

I did two years of CS undergrad before switching to Econ and Linguistics. Then went straight to law school like a good boy. I worked 7 years in BigLaw and dabbled on the side with a side project. Didn't do the coding myself but knew enough to work closely with the devs doing the work. One day I posted on HN [1] and it blew up and became the 9th-most popular Show HN. A few weeks later we were in FastCo and dozens of o…

That’s awesome! Thank you for sharing
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